ANSWER: c
32. Suppose your college institutes a new policy requiring you to pay for a permit to park your car in a campus parking lot.
a. The cost of the parking permit is not part of the opportunity cost of attending college if you would not have to pay for parking otherwise.
b. The cost of the parking permit is part of the opportunity cost of attending college if you would not have to pay for parking otherwise.
c. Only half of the cost of the parking permit is part of the opportunity cost of attending college.
d. The cost of the parking permit is not part of the opportunity cost of attending college under any circumstances.
ANSWER: b
33. You have driven 850 miles on a vacation and then you notice that you are only 50 miles from an attraction you hadn't known about, but would really like to see. In computing the opportunity cost of visiting this attraction you had not planned to visit, you should include
a. both the cost of driving the first 850 miles and the next 50 miles.
b. the cost of driving the first 850 miles, but not the cost of driving the next 50 miles.
c. the cost of driving the next 50 miles, but not the cost of driving the first 850 miles.
d. neither the cost of driving the first 850 miles nor the cost of driving the next 50 miles.
ANSWER: c
34. Savion's aunt gave him $25 for his birthday with the condition that Savion buys himself something. In deciding how to spend the money, Savion narrows his options down to four choices: Option 1, Option 2, Option 3, and Option 4. Each option costs $25. Finally, he decides on Option 2. The opportunity cost of this decision is
a. the value to Savion of the option he would have chosen had Option 2 not been available.
b. the value to Savion of Options 1, 3, and 4 combined.
c. the average of the values to Savion of Options 1, 3, and 4.
d. $25.
ANSWER: a
35. A rational decisionmaker
a. ignores marginal changes and focuses instead on "the big picture."
b. ignores the likely effects of government policies when he or she makes choices.
c. takes an action only if the marginal benefit of that action exceeds the marginal cost of that action.
d. takes an action only if the combined benefits of that action and previous actions exceed the combined costs of that action and previous actions.
ANSWER: c
36. Making rational decisions at the margin means that people
a. make those decisions that do not impose a marginal cost.
b. evaluate how easily a decision can be reversed if problems arise.
c. compare the marginal costs and marginal benefits of each decision.
d. always calculate the dollar costs for each decision.
ANSWER: c
37. People are willing to pay more for a diamond than for a bottle of water because
a. the marginal cost of producing an extra diamond far exceeds the marginal cost of producing an extra bottle of water.
b. the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water.
c. producers of diamonds have a much greater ability to manipulate diamond prices than producers of water have to manipulate water prices.
d. water prices are held artificially low by governments, since water is necessary for life.
ANSWER: b
38. The marginal benefit Joseph gets from purchasing a fourth pair of shoes is
a. the same as the total benefit he gets from purchasing four pairs of shoes.
b. more than the marginal cost of purchasing the fourth pair of shoes.
c. the total benefit he gets from purchasing four pairs of shoes minus the total benefit he gets from purchasing three pairs of shoes.
d. the total benefit he gets from purchasing five pairs of shoes minus the total benefit he gets from purchasing four pairs of shoes.
ANSWER: c
39. After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision is still months away and you may reverse this decision. Which of the following events could prompt you to reverse this decision?
a. The marginal benefit of going to Spain increases.
b. The marginal cost of going to Spain increases.
c. The marginal benefit of going to Ireland increases.